Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by ASLEF (PRF 40)



  ASLEF welcomes the opportunity to submit evidence about passenger rail refranchising to the Transport, Local Government and the Regions sub-committee.

  Decisions about franchising and refranchising are, of courses, made in the context of a profoundly fragmented railway, the legacy of what is now almost universally regarded as one of the most ill conceived privatisations in history. It is not possible to address the nature of franchises, the identity of franchises and the terms on which they operate in isolation from general government policy on transport and other factors facing the industry.

  Nevertheless, the question of franchising is of the greatest importance to ASLEF and its members. Train Operating Companies (TOCs) employ the great majority of our 16,200 members who are, in turn, the vast majority of train drivers employed in Britain today.

  It has been and remains ASLEF's contention that privatisation has been a disaster for Britain's railways and that no aspect of the industry can be addressed without acknowledging this fact. We hold the view, shared by the great majority of the public, that there is an urgent need to restore a publicly-owned and publicly-accountable railway which can ensure that the government gets value for money invested in it and that the public is assured of the safe, integrated and efficient service it is denied at present.

  Since the 2001 General Election there has been a deterioration in many aspects of the industry. Railtrack's finances are an increasing concern, there is a vacuum of leadership at the Strategic Rail Authority, long-term refranchising has effectively been halted—and the actual railway service is, in the view of the Rail passengers Council, the worst Britain has seen in peacetime.

  It is in that context that we submit our views on the refranchising process, industrial relations and the new guidance issued to the Strategic Rail Authority. Our aim, as ever, is to secure the best possible development of the railway industry in the interests of the public, and the best possible conditions for our own members within it.


  Industrial relations in the industry are indeed in need of a radical improvement. At the time of privatisation, the attitude that staff were a liability to be slimmed down as far and as fast as possible took deep root. Many managers with railway experience left the industry, and new managers at many of the TOCs had an attitude towards industrial relations shaped in other industries.

  It has been a long struggle, in some cases, to prevail upon managers to treat their employees—train drivers, in our case—with respect. The culture inculcated by privatisation of pursuit of short-term profit has often taken its toll on industrial relations. There are further, specific, problems which have arisen however and which need consideration in the context of franchising and refranchising. One of these is the drive to get train drivers to work longer hours, rest days etc. This is rooted in the fact that many franchises slimmed down their driving staff to below the level necessary to meet timetable requirement.

  Some managers find it cheaper to encourage drivers to work over-long hours rather than to recruit the required number of new staff. This, of course, has public safety as well as industrial relations implications.

    "Increased efficiency gains have only been achieved through overtime and increased workload created by a significant reduction of employment in the sector"[15]

  ASLEF believes that the statutory regulations of train drivers hours is long overdue. It is an anomaly that the hours of PSV and HGV drivers are, correctly, regulated by law, but those of train drivers are not. Driver fatigue can, under some circumstances, be a contributory factor in safety lapses. While the industry has agreed to a basic 35-hour week under pressure from ASLEF, rest day and overtime working, driven from the drivers' side by the need to secure more pay and from the employers side by the desire to minimise the headcount, remains a bane in the industry. In some cases, the pressure on drivers to work extra shifts has led to a serious poisoning of the industrial relations environment. ASLEF hopes to see legislation introduced to address the issue of train drivers' working time.

  Fragmentation has play a part here, too. Train drivers are now in an environment where, in all major and many minor centres, several TOCs or freight operating companies are competing to employ them. There is therefore obviously a tendency for trained drivers to gravitate towards the highest-paying company operating in their area, although factors other than pay do, of course, play a part. This, in turn, means that some TOCs are having to continually recruit and train new drivers just to stand still, and shortages may in some cases persist in spite of the best efforts of management. This is, in our view, the root of the problems presently facing Arriva Trains Northern, for example.

  We must also note that some industrial relations problems are simply caused by incompetent or authoritarian management, the product in part of the introduction of both senior personnel with little understanding of the railway and of the need to maximise shareholder return in a short period of time. The abuse of disciplinary procedures, unwillingness to honour signed agreements and petty harassment of drivers are all-too common in all-too many franchises.

  There are, of course, more positive examples to be highlighted. Some companies are attempting to build better relations with employees—GNER for example. Last year saw the introduction of the Professional Driving Agreement, which in the words of GNER's Human Resources Director, Mike Goodies, "laid down the foundation for a new era in the relationship between GNER and its Train Drivers".

  Drivers in GNER have attained professional occupational status with joint forums to review agreements and a partnership approach developing professional non-adversarial relationships based on honesty, integrity and loyalty. ASLEF would like to see this practice become more widespread.

  To address some of these problems, ASLEF has proposed a return to national standards of pay, conditions and training for all train drivers, as pertained under British Rail. This would involve, in all respects, a progressive "levelling-up" towards best practice. Such an approach would ensure the highest standards both of driver training and industrial relations. To date, however, the Association of Train Operating Companies and its members have been unwilling to countenance such proposals, even in respect of training. It remains our view, however, that only a return to national standards will reduce the industrial relations difficulties, periodic driver shortages and excessive overtime working which bedevil the industry at present.

  In the context of refranchising, it is our view that the industrial relations conduct and performance of Train Operating Companies and other franchise bidders should be taken into account, the more so since shortcomings in this respect directly impact on the ability of a TOC to meet its service obligation to passengers.


  The franchising and re-franchising process create a climate of uncertainty for employees in Train Operating Companies—for train drivers in particular. This is especially the case when the franchise map is being continually redrawn. Drivers in a given depot may find themselves moved to another franchise, or even divided and re-divided between several franchises.

  This means new colleagues, new managers, new rosters and, often, a requirement to learn new routes. Shunting employees around from one company to another, with changes of uniform and corporate branding, like so many freight wagons, is not conducive to high morale or efficient working. It is our view that insufficient weight has been given to these factors by the SRA in its rather cavalier approach to redrawing the franchise map.

  The recent government decision to extent all franchises by two years, and to effectively suspend the long-term refranchising process may be understandable in the context of the overall disarray of the privatised industry since the Hatfield crash one year ago. But this should not allow us to forget that the refranchising process was already in chaos before the decision of the Secretary of State. One franchise after another had hit problems due to either unsatisfactory bids, the impossibility of Railtrack delivering on its commitments in relation to the infrastructure, monopoly concerns and other factors.

  It is our view that whenever the process of long-term refranchising starts (and this is theoretically essential if investment in TOCs and new rolling stock is to be assured) most of these problems will remain. They are embedded in the structure of the industry, in particular in the separation of track from wheel, of infrastructure from train operations. They are exacerbated by the failure of the Strategic Rail Authority—or anyone else—to formulate an overall vision or plan for the development of the network, or even to give leadership in dealing with immediate problems.

  ASLEF has developed its criticisms of the SRA in its response to the new draft guidance issued by the government. These points are summarised here.


  We believe that the role of the SRA has failed in the objectives set before it by government at the time of its establishment.

  Its leadership performance in the early franchising period lacked focus and co-ordination with the net result that the refranchising has yet to deliver a single benefit to rail customers'. Likewise the SRA's long awaited strategic plan for the industry has fallen considerably behind schedule.

  It is our belief that the structure of the profit-led industry did not allow for clear strategic guidance, and at every turn the SRA found its intentions confounded by the interests of separate, powerful interests owing their main obligations to their own shareholders.

  We believe that the fragmented privatised industry did not allow for the SRA to impose co-operation between structures—rather, the mechanisms at the SRA's disposal only allowed for minimal influence. A view has developed that the "SRA's approach . . . is just a matter of asking operators what they want and calling the result a strategy".[16]

  The SRA's statutory powers over the privatised industry do not provide necessary weight to direct companies whose commercial incentives quite often preclude the collaboration and co-ordination that is vital for the industry to function effectively. It was the intention of the government that the SRA would take a commanding role by introducing strategy, planning and co-ordination but the market forces introduced by privatisation have confounded this intention. Without an industry-wide restructuring, the SRA's position lack substance and no decision it takes in relation to refranchising are likely to have significant positive outcomes.


  ASLEF, and the industry as a whole, welcomed the Governments 10-year plan and the associated investment. At the time it seemed that the years of financial starvation had come to an end. However, very serious question marks have since arisen over the viability of the plan.

  The £60bn of rail investment assumed investment from the private sector worth £34bn. Most commentators now accept that the private sector will find difficulty in attaining this figure, given the overall state of the industry, which is not an attractive one for investors. The financial situation on which the plans were based, has seriously deteriorated with Railtrack's share price collapse and the dramatic escalation in costs for the WCML and ECML upgrades. The CBI has cast doubt on the ability to deliver the 10-Year plan and Sir Alastair Morton, outgoing Chairman of the SRA, has warned that it "might take 15 years before Britain enjoyed a modern rail network unless the government poured in billions of pounds of extra subsidy"[17].

  The past twelve months have seen the present system allow for financial wastage through the recycling of public money. Train Operators receive a subsidy from the Treasury, which is paid to Railtrack for access charges. Railtrack receives fines from the Rail Regulator, which is paid back to the Treasury. Train Operators claim compensation from Railtrack, Railtrack pleads to the Treasury for extra financial assistance. The whole system resembles a giant money-laundering racket in which the only people not inconvenienced at all are the shareholders of the private firms involved, Railtrack above all.

  It is our contention that rebuilding the railway the nation needs will depend primarily on government investment. That has been the universal experience of other countries, with more efficient railways. It also reflects the nature of the railways, which we believe are a social good unsuited to direction by profit and market criteria. Indeed, government investment is already the backbone of the finances of Railtrack and, directly or indirectly, many TOCs. Total net subsidy payments to TOCs in 1999-2000 amounted to over £1bn. The problem at present is that the taxpayer is seeing very little ion return for this investment. Given the present structure of the industry, much of the money is wasted, handed over to shareholders, lawyers, consultants or recycled in fines, subsidies and charges as described above.


  No consideration of the issues raised in the committees terms of reference for this inquiry can be complete without a particular examination of Railtrack. It absorbs most of the investment, yet emerges as the main obstacle to either a restructuring of the industry or of any residual hope that the existing structure, with its emphasis on refranchising, could be made to work.

  It is a concern for ASLEF that Railtrack is consuming large quantities of the planed 10-year budget. In the aftermath of the tragic incident at Hatfield, Railtrack immediately raised its dividend to shareholders. As its share price collapsed and it sought a £1.5 billion advance from the taxpayer, it on the same day paid a further £150 million to its shareholders. Not to labour the point, this is, in our view, entirely unacceptable conduct which should have met with a firmer response from government. The company is seeking a further £2bn to help finance safety works and is also expected to receive an extra £497 m of taxpayers money in the next five years after the rail regulator proposed to halve the charges freight operators pay the company.

  Each year Railtrack produces its Network Management Statement (NMS) that outlines its plans for the management of railways in Great Britain. It has been argued that in the absence of the SRA's plan, the NMS is the nearest thing to a strategic overview for the industry[18]. In the NMS 2000 document, Railtrack envisaged a year on year reduction of investment in the rail infrastructure for 2004-05 to 2010-11. Of course the argument would be "as items are changed the need to spend on renewals would diminish", not so. The statement said that the growth of traffic on the network has increased and that the ". . . increase demand in terms of train kms of tonnage, could result in the worsening of other measures"[19]. Railtrack's general policy for structures is to "maintain rather than renew" and similarly in signalling using what is called "optimising whole-life costing" (saving made through extending the life of an item beyond its normal expectancy).

  Railtrack inserted in the statement that their "current expenditure plans are . . . subject to the outcome of the periodic review of access charges". Railtrack failed the industry, which is to provide a manifesto of strategic development the rail industry needs, in reality the 2000 NMS became a political statement.

  The 2001 NMS fared no better with Tom Winsor replying to the document as "profoundly unsatisfactory". The Rail Regulator went on to say that the NMS was "not useful, with a considerable gap between what is and what it should be" . . . in short, it was "too vague with too many fine words but little substance".

  We agree with the Transport Select Committee's observation that Railtrack has presided over a deterioration in track standards and agree with the comments of the Rail Regulator that "Railtrack has not maintained and renewed the network to a standard, which could reasonably be expected of it. Its past record is . . . not acceptable"[20]. Quite simply Railtrack operates a system whereby it is unable to cope ". . . when management, ownership and operation are divided between numerous uncooperative institutions with drifting lines of authority—Railtrack, the operating companies, the strategic rail authority. The Transport Department, the franchising director, the Railways Inspectorate and so on"[21].

  The former Chief Executive of Railtrack, Gerald Corbett said in August 2001 that: "I am afraid there will be another train crash and that will explode the whole thing again. The problem is the way the Railway was privatised, the fragmentation, the adversarial contracts. There is a reason why most railways in the world are integrated: it is that they are easier to manage . . . splitting into all these different bits and particularly splitting the wheel from the rail has made it a managerial nightmare"[22].

  If Mr Corbett is right—and we must hope that he is not, he has been wrong about many things—and there is a further major accident attributable to the fragmentation or profit motive introduced by privatisation—then it is our view that the public will this time rightly hold politicians accountable for a failure to act on the vast and ever-accumulating evidence that railway privatisation has failed every conceivable test of efficiency, value, development and, above all, safety.


  Our view is that any sober, non-ideological assessment of the state of the railways is that change is long overdue. Nothing that has been announced by the government since the general election yet rises to the scale of the problems. As stated above, our view, shared by most of the public, is that a return to some form of public ownership—here we are not prescriptive—is overdue. Privatisation has, in the case of this industry, clearly failed, and only a return to public ownership can provide the foundation for re-integrating the fragmented railway into one operation.

  ASLEF does not hold the view that there is no role at all for the private sector in the railways. Particularly where major projects are concerned, it would not be feasible for a publicly-run industry to retain all the necessary skills and resources in-house. Buying in private sector help would be perfectly normal. However, the evidence of major projects to date, from the CTRL to the WCML clearly indicate that leaving it to the free market is a guarantee that nothing will be done—or at least nothing on budget and on time.

  It now seems clear that there can be no strategy for the renewal of the industry, nor even an efficient refranchising process, while the railway infrastructure remains so grossly mismanaged. It is also more obvious than ever that the fragmentation of the industry, and the substitution of the profit culture for the public service ethos have done damage which cannot be reversed while the industry remains structured as it is.

  Our view is that Railtrack should be restored to public ownership as a matter of urgency, and that its maintenance and infrastructure work should be reintegrated, ending the present system of sub- and sub-sub- contracting which Lord Cullen, amongst others, has been so critical of. With that accomplished, the SRA could, on the basis of discussion and strategic planning, propose the progressive reintegration of the entire industry, including passenger service operation, in some publicly-accountable format.

  We hope that the Committee will give due weight to our opinions, since they are of those who; live and work in our industry. We are, once again grateful for the chance to have submitted them.

M D Rix

General Secretary

October 2001

15   Public Transport. Trials and Tribulations' Pub: FNV Bondgenoten, The Netherlands. October 2000. Dutch Ministry of Social Affairs and Employment commissioning of a survey into the effects of the introduction of market forces on the working conditions, conditions of employment and job security of employees. The studies where conducted in Sweden, Denmark, Great Britain and France. Interviews were carried out with authorities, private companies and trade unions (ASLEF & T&G UK) in private and public transport sector. Back

16   Shaw, Dr John, The role of rail in Britain's 10-year transport strategy. June 2000. Back

17   The Independent: "Byers and Morton square up as CBI attacks 10-year plan for transport". 16 July 2001. Back

18   Shaw, Dr John, The role of rail in Britain's 10-year transport strategy. June 2000. Back

19   Railtrack NMS 2000. Back

20   The Independent "MPs want Railtrack back under government control" 30 March 2001. Back

21   30 November 2000, The Times-"Why Blair is making Major Railway errors" (A. Kaletsky). Back

22   Sunday Times 19 August 2001. Back

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